TVA head Johnson will retire in 2019

After six years as president and CEO of Tennessee Valley Authority, Bill Johnson is stepping down.

He will depart sometime next year, following a search for his successor. The announcement came at a regular quarterly TVA board meeting at the Bancorp-South Conference Center in Tupelo, Mississippi.

“(When) I came to TVA, I didn’t mean to hang around this long,” Johnson said.

Johnson said he will turn 65 in January, and the power industry is changing rapidly. It just seemed like a good time to go, allowing a new leader to set TVA’s direction rather than inheriting an old plan, he said.

“I have no specific plans other than to continue to live in the South,” Johnson said.

He became TVA president and CEO in November 2012, coming from North Carolina’s Progress Energy, where he had worked since 1992, according to the TVA website.

Highest-paid government employee

Johnson is the highest paid U.S. government employee, with annual compensation totaling more than $6.5 million, a figure frequently seized upon by critics of TVA spending. Preemptively defending his own and others’ financial boost, he said Wednesday that TVA employee pay is in line with counterparts in private industry.

Board Chairman Richard Howorth said TVA will hire a consultant to find prospects, both internal and external.

“We’re taking on all comers,” he said. Howorth estimated the hiring process would take three or four months. Johnson and Howorth said Johnson is likely to stay briefly after a successor arrives, but not past a short orientation period.

Howorth and other board members praised Johnson’s tenure as president and CEO, as did Tennessee’s U.S. senators.

Retirement comes amid calls to resign

The decision comes after several calls for Johnson’s resignation by environmental and ratepayer groups, spurred by the agency’s controversial rate structure change and the revelation of a lavish corporate air fleet.

The purchase of the air fleet was “unjustified,” auditors said, adding in a later report that the agency broke federal rules with its helicopter use.

In a news release, Southern Alliance for Clean Energy Executive Director Stephen Smith said that under Johnson, TVA served corporate interests over the general public’s, lagged in renewable energy and became more secretive. He called for the board to find a successor “with a demonstrated commitment to and interest in public power values.”

Board member Eric Satz also said his goodbyes Wednesday. His term technically expired May 18, but outgoing board members can serve until the end of the end of the current Congressional session — or until a successor is sworn in, if that comes sooner. The 115th Congress will adjourn by Jan. 3, so Wednesday was Satz’s last regular board meeting.

Memphis attorney John Ryder is expected to fill the one seat already open on TVA’s nine member board, meaning Satz’s departure will still leave the board one member short.

At Johnson’s request, the board unanimously approved a raft of financial bonuses and pay increases for fiscal 2019, which began Oct. 1.

Those included short-term incentive bonuses for employees, executive bonuses for longer-term goals, executive pay exceeding the established pay structure, and a 6 percent raise for Johnson himself.

The agency would not release details of those raises and bonuses Wednesday. Johnson said details will be in the Form 10-K annual financial report TVA files with the Securities and Exchange Commission.

Gina Lodge, chairwoman of the board’s People and Performance Committee, said Johnson’s pay — with an annual compensation package of more than $6.5 million — is in the lowest quarter of CEO compensation for leaders of comparable private firms. Six percent of Johnson’s base pay would be about $60,000, while 6 percent of his total compensation would be $390,000 more for the whole of fiscal 2019.

During the past fiscal year TVA spent less and took in more money than projected — more than $11 billion in revenue, Chief Financial Officer John Thomas said.

“Overall, a very strong year financially for us,” he said.

TVA’s long-range plan is to keep cutting its debt, to about $20 billion, Johnson said. After several years of cost cutting, debt is already the lowest it’s been in a quarter of a century, down by $3.5 billion overall and $1.7 billion in the last year.

The agency plans to spend $2.2 billion on improved electric transmission over the next five years, and make several upgrades to existing power plants, Johnson said.

Environmental groups have criticized TVA for not pushing harder into solar power; but early this month the agency announced contracts with two firms to build the largest solar installations in Tennessee and Alabama, part of an $8 billion commitment to renewable energy over the next 20 years.

The Tennessee and Alabama projects, generating a combined 377 megawatts, will serve the $750 million Facebook data center planned for Huntsville, Johnson said. Facebook has committed to powering all its offices with 100 percent renewable power by 2020.

TVA has cut its carbon emissions by nearly half since 2005, and should cut them further by 2020, Johnson said.

More than half of TVA’s power came from carbon-free sources last year, he said. That includes nuclear, which is the agency’s largest source of power generation.

Recently TVA gave Chattanooga real estate developer Franklin Haney a 16 day extension — until the end of November — to finalize a deal to buy the unfinished Bellefonte nuclear plant in Alabama.

In November 2016 Haney paid $22 million toward his $111 million winning auction bid for Bellefonte and its assets. He had two years to finish the deal, but has not managed to do so.

Johnson wouldn’t predict whether Haney can get the necessary permissions and raise the money to complete the purchase.

“We did write off the remainder of Bellefonte,” Johnson said.

TVA has spent over $6 billion on the never-operational plant since it was conceived in 1968. Demand for power has been flat for several years, and Johnson is dubious of the market for another large scale nuclear plant’s power.

Source: Knoxville News Sentinel, by Brittany Crocker and Jim Gaines

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